THE CORPORATE LIBRARY

Related Party Transactions and Outside Related Director Information

PRG-Schultz International, Inc. (PRGX)

7/5/2006 Proxy Information

The following members of Mr. Cook's immediate family were previously employed by the Company and received cash compensation for 2005 in the amounts set forth beside their names: David H. Cook, brother -- $131,538 salary and a severance award of $58,462 and Harriette L. Cook, sister-in-law -- $74,423 salary and a severance award of $11,779. There are also members of Mr. Cook's family that are currently employed by the Company and received cash compensation for 2005 in the approximate amounts set forth beside their names: Patricia Sluiter, sister -- $75,406 and a bonus award of $5,650, and Allen R. Sluiter, brother-in-law -- $87,047 and a bonus award of $5,750. In addition, for 2004 performance, in March of 2005, David H. Cook received a grant of 2,500 nonqualified stock options, granted at $ 4.95 per share, the fair market value on the date of the grant. As of December 2005, David Cook's options were forfeited.

Mr. Toma's sister-in-law, Maria A. Neff, was employed with the Company as Executive Vice President - Human Resources until November, 2005. Ms. Neff's cash compensation for 2005 was $331,782 including salary of $160,993, severance of $50,770, deferred compensation payout of $87,084 and an auto allowance of $11,250. Ms. Neff's compensation in 2005 also included $21,685 for the value of restricted stock that vested in 2005. In connection with her separation from the Company, Ms. Neff is entitled to receive a severance of $220,000. A one time payment of $25,384 was paid in November 2005 and is being followed by twenty-three bi-weekly installments of $8,462, commencing in November 2005 and continuing until the severance amount is fully paid. In connection with the implementation of the 2005 Change in Control Program, Ms. Neff received a restricted stock grant of 40,000 shares, which were forfeited in September, 2005.

Financial advisory and management services historically have been provided to the Company by one of the Company's former directors, Mr. Jonathan Golden. Payments for such services to Mr. Golden aggregated $36,000 for 2005. In addition to the foregoing, Mr. Golden is a senior partner in a law firm that serves as the Company's principal outside legal counsel. Effective August 31, 2005, Mr. Golden resigned from the Company's Board of Directors.

The Company previously subleased approximately 3,300 square feet of office space to CT Investments, Inc. ("CT Investments") at a pass through rate equal to the cash cost per square foot paid by the Company under the master lease and the tenant finish in excess of the landlord's allowance. CT Investments is 90% owned by John M. Cook, the former Chairman of the Board and Chief Executive Officer of the Company, and 10% owned by John M. Toma, the former Vice Chairman of the Company. The Company received sublease payments of approximately $51,000 from CT Investments during 2005. On August 1, 2005, CT Investments vacated the office space, which was subsequently subleased to an independent third party.

On March 17, 2006, Blum Capital Partners, L.P. and its affiliates exchanged $36,006,000 of the Company's convertible notes due November 2006 for (1) $14,929,734 of 11% senior notes due March 2011, (2) $17,282,880 of 10% senior convertible notes due March 2011 and (3) 36,006 shares of senior series A convertible participating preferred stock (aggregate liquidation preference of $4,320,720), in connection with the Company's exchange offer for its convertible notes due 2006. Mr. N. Colin Lind is a managing partner of Blum Capital Partners, L.P. (together with its affiliates, "Blum"). Mr. Lind was a director of the Company from May 2002 to October 2005, and was re-elected to the Board in March 2006 pursuant to an agreement with the Ad Hoc Bondholders Committee formed to negotiate the Company's exchange offer and financial restructuring. Mr. Lind represented Blum affiliates on the Ad Hoc Bondholders Committee. Blum affiliates are lenders under the Company's current senior secured credit facility. Their participation in the loan is approximately $7 million. Blum affiliates were also lenders under the Company's prior $10 million bridge loan that was entered into on December 23, 2006 and repaid on March 17, 2006. Their participation was approximately $6 million. In connection with the foregoing, Blum received interest and commitment and origination fees of approximately $236,000 in 2005 related to the bridge loan and approximately $152,000 in interest related to the bridge loan in 2006. Blum is expected to receive interest under the senior secured credit facility of approximately $748,000 in 2006. In addition, the Ad Hoc Bondholders Committee, of which Blum was a member, was reimbursed for legal and financial advisory fees of approximately $498,354 in 2005 and $2,043,083 in 2006. The Ad Hoc Bondholders Committee had the contractual right to designate four of the Company's seven directors to be elected immediately following the closing of the exchange offer pursuant to the Restructuring Support Agreement.

On March 17, 2006, Parkcentral Global Hub Limited and Petrus Securities, L.P. exchanged $23,945,000 of the Company's convertible notes due November 2006 for (1) $9,578,000 of 11% senior notes due March 2011, (2) $11,493,600 of 10% senior convertible notes due March 2011 and (3) 23,945 shares of senior series A convertible participating preferred stock (aggregate liquidation preference of $2,873,400), in connection with the Company's exchange offer for its convertible notes due 2006. Parkcentral Global Hub Limited and Petrus Securities, L.P. were also represented on the Ad Hoc Bondholders Committee, are lenders under the Company's current senior credit facility and were lenders under the Company's prior $10 million bridge loan. Their participation in the senior credit facility is approximately $5 million and their participation in the bridge loan was approximately $4 million. In connection with the foregoing, they received interest and commitment and origination fees of approximately $174,000 in 2005 related to the bridge loan and approximately $101,000 in interest related to the bridge loan in 2006. Parkcentral and Petrus are expected to receive interest under the senior secured credit facility of approximately $534,000 in 2006.

4/5/2005 Proxy Information

The following members of Mr. Cook’s immediate family are employed by the Company and received cash compensation for 2004 in the approximate amounts set forth beside their names: David H. Cook, brother — $197,848, Harriette L. Cook, sister-in-law — $90,317, Patricia Sluiter, sister — $61,457, and Allen R. Sluiter, brother-in-law — $90,706. In addition, for 2004 performance, on March 4, 2005, David H. Cook received a grant of 5,000 nonqualified stock options, granted at $4.95 per share, the fair market value on the date of the grant. Each stock option grant has a five-year term with 25 percent of the respective options vesting and becoming exercisable on each of the first four anniversaries of the date of grant and is subject to the terms and conditions in the Company’s standard stock option agreement.

Mr. Toma’s sister-in-law, Maria A. Neff, is employed with the Company as Executive Vice President – Human Resources. Ms. Neff’s cash compensation for 2004 was $255,000. In addition, for 2004 she received a grant of 25,000 nonqualified stock options, granted at an exercise price of $4.16 per share, the fair market value on the date of the grant. The stock option grant has a five-year term with 25 percent of the respective options vesting and becoming exercisable on each of the first four anniversaries of the date of grant and is subject to the terms and conditions in the Company’s standard stock option agreement. In February 2005 Ms. Neff received 40,000 shares of restricted stock that are subject to the same terms and conditions described above for Mr. Toma’s restricted stock award in “Mr. Toma’s Agreement – Equity Awards”.

The Company currently subleases approximately 3,300 square feet of office space to CT Investments, LLC, at a “pass-through” rate equal to the cash cost per square foot paid by the Company under the master lease. CT Investments is 90 percent owned by Mr. Cook, Chairman of the Board, President and Chief Executive Officer of the Company and 10 percent owned by Mr. Toma, Vice Chairman of the Company. The Company received payments of approximately $44,655 in 2004 in connection with such sublease.

Jonathan Golden, a director of the Company, provides financial advisory and management consulting services to the Company through JGPC, his personal corporation. Mr. Golden is the sole shareholder of JGPC. During 2004, the Company paid JGPC aggregate consulting fees of approximately $72,000. The Company currently pays JGPC a consulting fee of $6,000 per month. The consulting agreement may be terminated by either party for any reason upon not less than 30 days’ prior notice. Mr. Golden, through JGPC, is also a senior partner in AGG, the law firm that serves as the Company’s principal outside legal counsel. The Company believes that the fees paid to AGG were reasonable in relation to the services provided and expects to continue to utilize the services of this law firm.

4/16/2004 Proxy Information

John M. Toma served as Vice Chairman of PRG-Schultz International, Inc. from January 1997 until May 2003 and as Senior Vice President-Administration of The Profit Recovery Group from 1990 to 1992.

The following members of Mr. Cook’s immediate family are employed by the Company and received cash compensation for 2003 in the approximate amounts set forth beside their names: David H. Cook, brother — $200,073, Harriette L. Cook, sister-in-law — $90,000, Patricia Sluiter, sister — $86,348, and Allen R. Sluiter, brother-in-law — $172,232. In addition, for 2003 David H. Cook received a grant of 2,000 nonqualified stock options, granted at an exercise price of $7.41 per share, the fair market value on the date of grant. On February 24, 2004, David H. Cook received a grant of 5,000 nonqualified stock options, granted at $4.16 per share, the fair market value on the date of grant. Each stock option grant has a five-year term with 25 percent of the respective options vesting and becoming exercisable on each of the first four anniversaries of the date of grant.

Mr. Toma’s sister-in-law, Maria A. Neff, is employed with the Company as Executive Vice President – Human Resources. Ms. Neff’s cash compensation for 2003 was $241,154. In addition, for 2003 she received a grant of 25,000 nonqualified stock options, granted at an exercise price of $7.41 per share, the fair market value on the date of grant. On February 24, 2004, Ms. Neff received a grant of 25,000 nonqualified stock options, granted at $4.16 per share, the fair market value on the date of grant. Each stock option grant has a five-year term with 25 percent of the respective options vesting and becoming exercisable on each of the first four anniversaries of the date of grant.

Jonathan Golden, a director of the Company, provides financial advisory and management consulting services to the Company through JGPC. Mr. Golden is the sole shareholder of JGPC. During 2003, the Company paid JGPC aggregate consulting fees of approximately $72,000. The Company currently pays JGPC a consulting fee of $6,000 per month. The consulting agreement may be terminated by either party for any reason upon not less than 30 days prior notice. Mr. Golden, through JGPC, is also a senior partner in Arnall Golden Gregory LLP, the law firm that serves as the Company’s principal outside legal counsel. Fees paid to this law firm aggregated approximately $541,000 in 2003. The Company believes that these fees were reasonable in relation to the services provided and expects to continue to utilize the services of this law firm.

The Company currently subleases approximately 3,300 square feet of office space to CT Investments, LLC, at a “pass-through” rate equal to the cash cost per square foot paid by the Company under the master lease. CT Investments is 90 percent owned by Mr. Cook, Chairman of the Board, President and Chief Executive Officer of the Company and 10 percent owned by Mr. Toma, Vice Chairman of the Company. The Company received payments of approximately $39,000 in 2003 in connection with such sublease.

In 2003, the Company used the services of FlightWorks, Inc., a company specializing in aviation charter transportation. Through October 24, 2003, the aircraft used by the Company was leased by FlightWorks from CT Aviation Leasing LLC, a company 100 percent owned by Mr. Cook. The Company paid FlightWorks approximately $2,900 per hour plus landing fees and other incidentals for use of such charter transportation services, of which 95 percent of such amount was paid by FlightWorks to CT Aviation Leasing LLC. The Company, after significant research, believes that the rate paid represents fair market value for the type of aircraft involved. The Company had no minimum usage requirement under its arrangement with FlightWorks. This arrangement was terminated in October 2003 upon sale of the CT Aviation Leasing LLC aircraft. The Company’s leasing arrangement with FlightWorks was approved by disinterested directors. During 2003, the Company recorded expenses of approximately $627,000 for the use of the CT Aviation Leasing LLC aircraft.

4/21/2003 Proxy Information

The following members of Mr. Cook's immediate family are employed by the Company and received compensation for 2002 in the approximate amounts set forth beside their names: David H. Cook, brother - $210,954, Harriette L. Cook, sister-in-law - $91,000, Pamela M. Cook, sister - $127,827, and Allen R. Sluiter, brother-in-law - $169,598. In addition, David H. Cook and Harriette L. Cook received grants of 3,000 and 1,000 nonqualified stock options, respectively, granted at an exercise price of $9.28 per share, the fair market value on the date of grant. The stock options have a five-year term with 25 percent of the options vesting and becoming exercisable on each of the first four anniversaries of the date of grant.

Mr. Toma's sister-in-law, Maria A. Neff, is employed with the Company as Executive Vice President - Human Resources. See "Summary Compensation Table" for compensation paid to Ms. Neff by the Company for 2002.

On January 24, 2002, the Company acquired the businesses of HSA-Texas and certain of its affiliates (the "Schultz Acquisition") for 14,759,970 unregistered shares of the Company's common stock and the assumption of certain HSA-Texas liabilities, including debt of approximately $49.6 million, a portion of which was repaid at closing. The purchase price was determined through arms-length negotiations between the parties. In addition, options to purchase approximately 1.1 million shares of the Company's common stock were issued in exchange for outstanding HSA-Texas options. Immediately following these transactions, Howard Schultz, now a director of the Company, and Andrew Schultz, his son and a former director of the Company, collectively beneficially owned 4,512,366 shares and 5,522,758 shares, respectively, of the Company's common stock. Included in debt assumed by the Company was approximately $7.8 million owing to Howard Schultz for loans to HSA-Texas. The Company is currently in discussions with Messrs. Schultz to resolve certain pre-acquisition tax issues, the resolution of which could result in the purchase price of the acquisitions being reduced by as much as $1.5 million. The amount of such reduction, if any, has not been agreed upon, and final resolution will involve interpretation of relevant provisions contained in the acquisition agreements.

The Company, Howard Schultz, Andrew Schultz, certain trusts affiliated with the Schultz family, Mr. Cook, and Mr. Toma entered into a shareholder agreement in connection with the Schultz Acquisition. In its original form, the agreement prohibited the parties from transferring more than $20.0 million of Company stock in any six-month period without written consent by all parties, except to certain family members or affiliates, pursuant to a Board-approved tender offer or exchange offer; as part of a public sale in a "brokers' transaction" (as defined in Securities Act Rule 144); in certain registered offerings contemplated by the registration rights agreement described below; or pursuant to certain charitable or gratuitous transfers not exceeding, in the aggregate, $10.0 million in any given twelve-month period. In addition, the parties must cause any shares of the Company's common stock they beneficially own to be voted as recommended by a majority of the Company's Board of Directors consisting of at least 9 out of 13 directors (or, if the size of the Board should change, an equal proportion). This requirement does not apply if the Board withdraws its recommendation before the vote. The parties are generally prohibited from causing a vote, or voting, in favor of a sale of the Company unless the Board has recommended it. They also may not participate in or encourage the solicitation of proxies in opposition to the Company's Board; form or participate in a group for the purpose of acquiring, holding, voting or effecting the transfer of any of the Company's common stock; or take any action that might require the Company to publicly announce a sale of the Company, unless the Board has recommended the sale. In connection with the August 2002 acquisitions of stock by affiliates of Berkshire Partners and Blum L.P. from Howard and Andrew Schultz and certain of their affiliates, discussed below, the shareholder agreement was amended to provide as follows: (i) all shares transferred to Berkshire Partners, Blum L.P. and their affiliates were transferred free of the restrictions contained in the shareholder agreement, (ii) Mr. Toma was released from the transfer restrictions contained in the shareholder agreement, (iii) Mr. Cook agreed that certain of the exceptions to the transfer restrictions would not be available to him and a new exception was added allowing Mr. Cook to transfer less than 2,043,571 shares in the aggregate, (iv) the termination provisions were amended to provide that the agreement would remain in force and effect until January 24, 2004, without exception, (v) Howard Schultz and Andrew Schultz agreed that they would not directly or indirectly acquire record or beneficial ownership of any additional shares of Company common stock prior to May 14, 2003, and (vi) the registration rights agreement entered into in connection with the Schultz Acquisition was terminated.

The Company also entered into a registration rights agreement under which the Company became obligated to file a registration statement on Form S-3 on or before the closing of the Schultz Acquisition to register up to $10.0 million of the Company's common stock as directed by Messrs. Howard and Andrew Schultz. Although this Form S-3 was filed, the shares to be registered were sold in a private transaction, and the Company was authorized to withdraw the Form S-3, with no obligation to refile it. The agreement also required the Company, upon written request, to register the shares of common stock issued in the Schultz Acquisition for resale pursuant to a firm commitment underwritten public offering, subject to certain exceptions. The Company was required to pay all registration expenses except under certain circumstances, including if the registration request was subsequently withdrawn, unless the selling shareholders agreed that the request would count as the demand registration under the registration rights agreement. The registration rights agreement was terminated in connection with the August 2002 amendment to the shareholder agreement described above.

During August 2002, Howard Schultz and Andrew Schultz and certain of their affiliates (collectively referred to herein as "the Schultz holders"), entered into agreements to sell approximately $75.7 million, or approximately 8.68 million shares, of the Company's common stock to certain affiliates of Berkshire Partners and Blum L.P., in private transactions. Berkshire Partners and Blum L.P. each purchased approximately $37.8 million, or approximately 4.34 million shares, of the Company's common stock. Berkshire Partners and Blum L.P. are currently represented on the Company's Board of Directors by Mr. Greimann and Mr. Lind, respectively.

Berkshire Partners and Blum L.P. also agreed to lend to certain Schultz holders in the aggregate $25 million, and entered into put and call arrangements to purchase additional shares from the Schultz holders to the extent that the Company does not exercise its options to purchase such shares as described below.

During August 2002, an affiliate of Mr. Howard Schultz granted the Company two options (the "First Option Agreement" and the "Second Option Agreement") to purchase, in total, approximately 2.9 million shares of the Company's common stock at a price of $8.72 per share plus accretion of 8 percent per annum from August 27, 2002.

On September 12, 2002, the Board granted the Company's executive management the discretionary authority to exercise one or both options (either through partial or complete exercises). On September 20, 2002, the Company exercised the First Option Agreement in its entirety and purchased approximately 1.45 million shares of its common stock from the Howard Schultz affiliate, for approximately $12.68 million, representing a price of $8.72 per share plus accretion of 8 percent per annum from the August 27, 2002 option issuance date. The option purchase price was funded through borrowings under the Company's senior bank credit facility. The Second Option Agreement remained outstanding as of December 31, 2002, and expires on May 9, 2003.

In connection with the August 2002 transactions, the Company entered into a registration rights agreement with certain affiliates of Blum L.P. The agreement provides that at any time on or after January 24, 2004, at the request of the Blum L.P. affiliates, the Company shall be required to file up to three demand registrations on Form S-1 and unlimited registrations on Form S-3. In addition, the agreement grants certain piggyback registration rights. These registration rights pertain not only to the shares of Company stock owned by the Blum L.P. affiliates on the date of the agreement, but also to any such shares acquired in the future. In addition, the agreement grants the Blum L.P. affiliates the right to demand up to three registrations on Form S-1 for an aggregate of up to 1,603,643 shares at any time; provided that any such registration would reduce the number of registrations available after January 24, 2004 for all shares. The Company will pay all expenses of registration other than underwriters' commissions and discounts. The agreement also provides for customary indemnification arrangements between the Company, on the one-hand, and the Blum L.P. affiliates on the other. The agreement terminates all rights of Blum L.P. and any of its affiliates under that certain Amended and Restated Registration Rights Agreement dated as of March 2002 and all rights of Blum L.P. and any of its affiliates pursuant to Section 4.2 of that certain Note Purchase Agreement with the Company dated as of December 3, 2001, pertaining to registration rights.

In connection with the August 2002 transactions, the Company also entered into a registration rights and lock-up agreement with certain affiliates of Berkshire Partners. The agreement provides that at any time on or after January 24, 2004, at the request of the Berkshire Partners affiliates, the Company shall be required to file one demand registration on Form S-1 and unlimited registrations on Form S-3. In addition, the agreement grants certain piggyback registration rights. The registration rights pertain not only to the shares of Company stock acquired by the Berkshire Partners affiliates in connection with the August 2002 transactions, but also to any shares of Company common stock acquired in the future. The Company will pay all expenses of registration other than underwriters' commissions and discounts. The agreement also provides for customary indemnification arrangements between the Company, on the one-hand, and the Berkshire Partners affiliates on the other. Pursuant to the agreement, the Berkshire Partners affiliates have agreed to certain transfer restrictions on the shares acquired by them in connection with the August transactions.

The Company also entered into an Investor Rights Agreement with certain affiliates of Berkshire Partners and Blum L.P. that requires the Company to utilize reasonable efforts to cause Mr. Greimann or another person designated by Berkshire Partners to be nominated for election to the Board, and Mr. Lind or another person designated by Blum L.P. to be nominated for election to the Board, as long as each such entity shall, respectively, continue to hold in excess of 2,000,000 shares of Company common stock (subject to adjustments, stock splits, stock dividends and reclassifications). In addition, the Agreement provides that for so long as Berkshire Partners and its affiliates and Blum L.P. and its affiliates, respectively, shall continue to own any shares of Company common stock, each such entity shall have the right to designate an observer to attend Company Board meetings.

In connection with the August 2002 transactions, the Company and certain affiliates of Blum L.P. (the "Investors") also entered into an Amended and Restated Standstill Agreement pursuant to which the Investors agreed to certain restrictions with respect to the acquisition, transfer, and voting of Company common stock. In addition, the Company amended its shareholder protection rights plan to provide that the Investors would not be deemed an Acquiring Person thereunder for so long as the Amended and Restated Standstill Agreement is in effect and for so long as the Investors have not increased their beneficial ownership of common stock above that shown in the Investors' Amendment to Schedule 13D filed with the Securities and Exchange Commission on June 17, 2002 by more than 5,784,675 shares in the aggregate (without giving effect to any stock split, share dividend, recapitalization, reclassification or similar transaction); provided however, that this amount shall be reduced, on a share for share basis, by any shares sold or otherwise disposed of by any Investor other than to another Investor and by that number of shares that are acquired by the Company pursuant to the Second Option Agreement.

Blum L.P. and its affiliates currently beneficially own approximately 21 percent of the Company's outstanding common stock, including stock obtainable upon conversion of convertible notes. Blum L.P., in accordance with its contractual rights, has designated an observer to attend the Company's Board meetings. Mr. Lind, a Managing Partner of Blum L.P., is a director of the Company. See "Ownership of Directors, Principal Shareholders and Certain Executive Officers" for additional stock ownership information.

Berkshire Partners and its affiliates currently beneficially own approximately 7 percent of the Company's outstanding common stock. Berkshire Partners, in accordance with its contractual rights, has designated an observer to attend the Company's Board meetings. Mr. Greimann, a Managing Member of Berkshire Partners, is a director of the Company. See "Ownership of Directors, Principal Shareholders and Certain Executive Officers" for additional stock ownership information.

In November 2002, the Company relocated its principal executive offices. In conjunction with this relocation, the Company is subleasing approximately 3,300 square feet of office space to CT Investments, LLC, at a "pass-through" rate equal to the cash cost per square foot paid by the Company under the master lease and the tenant finish in excess of the landlord's allowance. CT Investments is 90 percent owned by Mr. Cook, Chairman of the Board and Chief Executive Officer of the Company and 10 percent owned by Mr. Toma, Vice Chairman of the Company.

Financial advisory and management services historically have been provided to the Company by one of the Company's directors, Mr. Jonathan Golden, who is also a shareholder of the Company. Payments for such services to Mr. Golden aggregated $72,000 in 2002. The Company will continue to utilize Mr. Golden's services, and, as such, has agreed to pay him a minimum of $6,000 per month for financial advisory and management services in 2003, unless and until the agreement is terminated. Mr. Golden, through JGPC, is also a senior partner in Arnall Golden Gregory LLP, the law firm that serves as the Company's principal outside legal counsel. Fees paid to this law firm aggregated $1.8 million in 2002. The Company believes that these fees were reasonable in relation to the services provided and expects to continue to utilize the services of this law firm.

The Company currently uses and expects to continue its use of the services of Flightworks, Inc., a company specializing in aviation charter transportation. The aircraft to be used by the Company is leased by Flightworks from CT Aviation Leasing LLC, a company 100 percent owned by Mr. Cook. The Company pays Flightworks approximately $2,900 per hour plus landing fees and other incidentals for use of such charter transportation services, of which 95 percent of such amount will be paid by Flightworks to CT Aviation Leasing LLC. The Company, after significant research, believes that the rate it pays represents fair market value for the type of aircraft involved. The Company does not have a minimum usage requirement under its arrangement with Flightworks. During 2002, the Company recorded expenses of approximately $400,000 for the use of the CT Aviation Leasing airplane.

During the year ended December 31, 2002, the Company paid Mr. Howard Schultz, approximately $200,000 for property leased from an affiliate of Mr. Schultz. This lease was terminated in conjunction with the November 1, 2002 termination of Mr. Schultz's employment agreement.

Jonathan Golden, a director of the Company, provides consulting services to the Company through JGPC. Mr. Golden is the sole shareholder of JGPC. During 2002, the Company paid JGPC aggregate consulting fees of approximately $72,000. The Company currently pays JGPC a consulting fee of $6,000 per month. The consulting agreement may be terminated by either party for any reason upon not less than 30 days prior notice.

Concurrent with the Schultz Acquisition on January 24, 2002, Mr. Schultz became Chairman of the Board and served in this position until August 27, 2002. Under the terms of Mr. Schultz’s employment agreement, Mr. Schultz received an annual base salary of $400,000 until his resignation from the Company on November 1, 2002. In addition, on January 24, 2002, he received options to purchase 250,000 shares of the Company’s common stock at an exercise price per share of $9.28, which was equal to the closing price of the Company’s common stock on the closing date of the Schultz Acquisition. These options vest over a four-year period at the rate of 25 percent per year.

The Company also assumed options held by Arthur Budge, Jr. to purchase 167,631 shares of HSA-Texas common stock, in connection with the Schultz Acquisition. The HSA-Texas options, with an exercise price of $9.06 per share, converted into options to purchase 248,295 shares of the Company’s common stock at an exercise price of $6.12 per share (reflecting an option conversion ratio of 1.4812).